Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 63 million Americans will increase 1.5 percent in 2014, the Social Security Administration announced today. The 1.5 percent cost-of-living adjustment (COLA) will begin with benefits that more than 57 million Social Security beneficiaries receive in January 2014. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2013.
Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $117,000 from $113,700. Of the estimated 165 million workers who will pay Social Security taxes in 2014, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.
What is a cost-of-living adjustment (COLA)?
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
Who determines the CPI-W?
The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. By law, it is the official measure used by the Social Security Administration to calculate COLAs.
Will the maximum taxable earnings amount change in 2014?
Yes. Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $117,000 from $113,700.
Will the retirement earnings test exempt amounts change in 2014?
Yes. The earnings limit for workers who are younger than "full" retirement age (age 66 for people born in 1943 through 1954) will be $15,480. (We deduct $1 from benefits for each $2 earned over $15,480.)
The earnings limit for people turning 66 in 2014 will be $41,400. (We deduct $1 from benefits for each $3 earned over $41,400 until the month the worker turns age 66.) There is no limit on earnings for workers who are "full" retirement age or older for the entire year.
Will my Medicare premiums increase in 2014?
Information about Medicare changes for 2014 is available at Medicare.gov.
Medicare Open Enrollment is from now until December 7 – Review and Compare your Medicare Coverage Options.
District Manager – Trenton, NJ
Social Security Administration